“Squeezing more life out of every dollar before deciding to spend it” is how middle-income consumers are described in the latest report on economic activity by the Federal Reserve, released Wednesday.
Low-income consumers, the latest Beige Book asserts, showed greater financial strain.
The Beige Book is a semi-monthly report (published eight times a year) that provides anecdotal information on current economic conditions from each of the 12 Federal Reserve Bank districts through reports from bank and branch directors and interviews with key business contacts, economists, market experts, and other sources.
Higher income households, in contrast to the other two groups, remained “resilient and less sensitive to price increases,” according to the report. The contrast, the report contends, shows an increasing bifurcation across income groups and affordability pressures. Along those lines, consumer spending remained mixed across Reserve Bank districts.
In other areas, the report notes:
- Banking conditions were stable across most districts But, residential mortgages, consumer, and agricultural loan delinquencies were noted as rising in several of the districts.
- Credit card usage increased, there were fewer retail visits, and stronger demand for necessities.
- Auto dealers reported softer new vehicle demand tied to affordability and fuel costs, alongside substitution toward used and hybrid vehicles.
- Manufacturing activity was up at a modest to strong pace for nine districts; only one noted a slight decline from the previous period.
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